In an Operations Memo dated January 7, 2009, Amy Mendel-Clemens, of the Division of Health Care Access and Accountability, discussed the implementation of the Deficit Reduction Act of 2005 ("DRA") rules as to Wisconsin.
As we all know, the DRA made major changes to the Medicaid divestment laws. These changes included a new divestment penalty period begin date, a longer look back period, new treatment options for multiple divestments, a requirement that penalty periods include partial months, and the mandate that certain types of asset transfers be considered divestments. Under the DRA, these changes apply primarily to divestments that occur on or after February 8, 2006.
As to Wisconsin, after the federal government implemented the DRA rules, the legal counsel for the Wisconsin Department of Health and Family Services determined that the federal DRA provisions could not be implemented in Wisconsin until the state law was changed. As a result, the DRA provisions were included in Wisconsin Act 20, which was enacted on October 26, 2007.
Even though the Operations Memo dealt with all of the provisions related to DRA, this blog has been designed only to address the issues related to Medicaid Compliant Annuities. As to annuities, annuities purchased on or after January 1, 2009, must name the Wisconsin Department of Health Services Estate Recovery Program as a remainder beneficiary. The requirement to name the state as a remainder beneficiary also applies to annuities purchased prior to January 1, 2009, if certain transactions involving the annuity were made by the individual or spouse on or after January 1, 2009. This requirement applies to all annuities, regardless of whether they are considered revocable or not. An annuity must name the Wisconsin Department of Health Services Estate Recovery Program as the remainder beneficiary in the first position for the total amount of medical assistance paid on behalf of the institutionalized individual, unless there is a community spouse and/or a minor or disabled child.
In addition to naming the state as the remainder beneficiary, in order for an annuity purchased after January 1, 2009, to not be treated as a divestment the following conditions must be met:
- The annuity must be irrevocable and non-assignable.
- The annuity must be actuarially sound, in accordance with the life expectancy tables published by the Chief Actuary of the Social Security Administration.
- The annuity must provide payments in approximately equal amounts, with no deferred or balloon payments.
To read the complete Operations Memo that was released on January 7, 2009, please click here.
